Occupy Wall Street

I also don't understand how one can so cavalierly talk about borrowing and/or printing on the back of the strength of the dollar.

So you want government spending to continue on heavily predicated on the assumption of an ongoing strong dollar, which is itself largely predicated on the dollar being a reserve currency? And you're ok with just building the perpetual existence of that right into your funding model for a large chunk of government?

And if that yields, when inevitably it will, the resulting infalationary spike won't affect most people in the country? Really? A country where most people don't have net savings, live largely on their incomes only, and import most of the finished products they use.. won't have their lifestyles drastically affected by a currency devaluation?

That makes NO sense to me. It screams "Emperors-New-Government". It screams the same fancy-economic models that all those finance whizzes were oh-so-sure would prop up the housing bubble forever and ever and ever. It screams pathology, and insanity to me.

Colour me skeptical of the lovely new invisible clothes that are being peddled.

And if that yields, when inevitably it will, the resulting infalationary spike won't affect most people in the country? Really? A country where most people don't have net savings, live largely on their incomes only, and import most of the finished products they use.. won't have their lifestyles drastically affected by a currency devaluation?

Is that an avoidable fate in any case? Standard of living drops if it's deflationary and nobody is employed.

I also don't understand how one can so cavalierly talk about borrowing and/or printing on the back of the strength of the dollar.

So you want government spending to continue on heavily predicated on the assumption of an ongoing strong dollar, which is itself largely predicated on the dollar being a reserve currency? And you're ok with just building the perpetual existence of that right into your funding model for a large chunk of government?

And if that yields, when inevitably it will, the resulting infalationary spike won't affect most people in the country? Really? A country where most people don't have net savings, live largely on their incomes only, and import most of the finished products they use.. won't have their lifestyles drastically affected by a currency devaluation?

What inflationary spike? There's a reason people focus on core inflation. Non-core inflation is governed by all sorts of extrinsic factors, like the weather, and how fucked up OPEC is being. Core inflation is still influenced by these, but to a lesser extent; it's much more dependent on spending patterns, economic policy, employment, and so on. And core inflation isn't spiking.

In any case, people who don't have net savings and do have net debt--which is descriptive of most people who aren't rich--are helped, not hindered, by inflation. Inflation boosts their wages and devalues their debts.

If core inflation does start to become problematic, the government can raise interest rates and raise taxes to counter that.

I also don't understand how one can so cavalierly talk about borrowing and/or printing on the back of the strength of the dollar.

So you want government spending to continue on heavily predicated on the assumption of an ongoing strong dollar, which is itself largely predicated on the dollar being a reserve currency? And you're ok with just building the perpetual existence of that right into your funding model for a large chunk of government?

And if that yields, when inevitably it will, the resulting infalationary spike won't affect most people in the country? Really? A country where most people don't have net savings, live largely on their incomes only, and import most of the finished products they use.. won't have their lifestyles drastically affected by a currency devaluation?

What inflationary spike? There's a reason people focus on core inflation. Non-core inflation is governed by all sorts of extrinsic factors, like the weather, and how fucked up OPEC is being. Core inflation is still influenced by these, but to a lesser extent; it's much more dependent on spending patterns, economic policy, employment, and so on. And core inflation isn't spiking.

In any case, people who don't have net savings and do have net debt--which is descriptive of most people who aren't rich--are helped, not hindered, by inflation. Inflation boosts their wages and devalues their debts.

If core inflation does start to become problematic, the government can raise interest rates and raise taxes to counter that.

Maybe I'm just thinking about this superficially (and economics isn't my strong point), but wouldn't rich people be in a better position to leverage _lots_ of debt, and therefore also be disproportionately assisted by a large rate of inflation? For instance, if you're rich, it's probably easier for you to get a mortgage on a $10M home than if you're poor.

Also, don't they have plenty of investment opportunities that are tied to inflation?

It seems pretty likely, given how things have turned out in the past, that those with money will still be able to leverage a high inflationary period into yet more money for themselves.

InflationSome Austrian school economists have theorized that high inflation, caused by a country's monetary policy, can contribute to economic inequality.[42] This theory argues that inflation of the money supply is a coercive measure that favors those who already have an earning capacity, disfavoring those on fixed income or with savings, thus aggravating inequality. They cite examples of correlation between inflation and inequality and note that inflation can be caused independently by "printing money", suggesting causation of inequality by inflation.

The "free money" that's been available to America, that you seem to be so optimistic about, seems to me to have done little more than allow the development of a completely pathological perspective on spending and its relation to income, a pathological perspective on taxes, and compltely detached and fantasy notions of what and how government should operate. It's funded an all-American meth high for decades. As good as a meth-high may feel, I don't see how it's a good thing that it's been allowed to happen.

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So you want government spending to continue on heavily predicated on the assumption of an ongoing strong dollar, which is itself largely predicated on the dollar being a reserve currency? And you're ok with just building the perpetual existence of that right into your funding model for a large chunk of government?

And if that yields, when inevitably it will, the resulting infalationary spike won't affect most people in the country? Really? A country where most people don't have net savings, live largely on their incomes only, and import most of the finished products they use.. won't have their lifestyles drastically affected by a currency devaluation?

Two points:

First, you are needlessly turning this into some sort of morality play. Using the monetary and fiscal tools at our disposal to increase GDP growth and the standard of living is a good thing. I don't buy into the Protestant ethic that debt is inherently bad and savings good. Nor is there nobility in shared sacrifice or suffering for its own sake. This is, or ought to be, a basically technocratic discussion.

All of that is not to say that I don't agree that the economy has become too financialized, too militarized and too devoted to an insane quest to live forever regardless of quality of life.

Second, the United States is not Greece writ large. We have industrial output of around $10,300 per capita. That's lower than Germany ($11,250) and Japan ($10,700), but not by much. Exports tell a similar story. Although we import lots of oil we also produce a great deal of oil, gas and coal. We have very well respected research universities that attract grad students from all over the world, many of whom stay on. In fact we have net migration inflows from practically every country on the planet. Our private sector attracts more foreign direct investment than any other country in the world by a significant amount.

Furthermore, there is no upcoming collapse moment. The aspects of the global economy that allow the United States to run a current account deficit are not fixed in stone, but nor are they subject to wild swings. If and when other stable currencies come onto the world stage central banks will diversify away from treasuries. As emerging markets grow more liquid and transparent investors will increasingly look to invest in those countries for better returns. As the population ages (assuming we don't do the smart thing an offset this shift with immigration) work force participation will fall. But none of these things are happening tomorrow or even next year -- and when these things do start to bite we will be best prepared for it if we are have a robust economy, not one stunted by a foolish, puritanical desire to "balance the budget".

Maybe I'm just thinking about this superficially (and economics isn't my strong point), but wouldn't rich people be in a better position to leverage _lots_ of debt, and therefore also be disproportionately assisted by a large rate of inflation? For instance, if you're rich, it's probably easier for you to get a mortgage on a $10M home than if you're poor.

Sure, but if you're rich, you're probably buying that house with cash anyway.

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Also, don't they have plenty of investment opportunities that are tied to inflation?

InflationSome Austrian school economists have theorized that high inflation, caused by a country's monetary policy, can contribute to economic inequality.[42] This theory argues that inflation of the money supply is a coercive measure that favors those who already have an earning capacity, disfavoring those on fixed income or with savings, thus aggravating inequality. They cite examples of correlation between inflation and inequality and note that inflation can be caused independently by "printing money", suggesting causation of inequality by inflation.

One surefire way to tell that an economist doesn't know what they're talking about is that are described, by themselves or others, as "Austrian school".

Wages more or less keep track with inflation (typically lagging, but still more or less keeping pace). Mortgages, which tend to have fixed interest rates, and credit cards, likewise, do not. If we lived in a time where nobody was indebted, poor people had small savings and no investments, and rich people had large savings and larger investments, then perhaps inflation would be more troublesome. But we don't. We live in a time when poor people are in debt up to their eyeballs.

Maybe I'm just thinking about this superficially (and economics isn't my strong point), but wouldn't rich people be in a better position to leverage _lots_ of debt, and therefore also be disproportionately assisted by a large rate of inflation? For instance, if you're rich, it's probably easier for you to get a mortgage on a $10M home than if you're poor.

Sure, but if you're rich, you're probably buying that house with cash anyway.

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Also, don't they have plenty of investment opportunities that are tied to inflation?

InflationSome Austrian school economists have theorized that high inflation, caused by a country's monetary policy, can contribute to economic inequality.[42] This theory argues that inflation of the money supply is a coercive measure that favors those who already have an earning capacity, disfavoring those on fixed income or with savings, thus aggravating inequality. They cite examples of correlation between inflation and inequality and note that inflation can be caused independently by "printing money", suggesting causation of inequality by inflation.

One surefire way to tell that an economist doesn't know what they're talking about is that are described, by themselves or others, as "Austrian school".

Wages more or less keep track with inflation (typically lagging, but still more or less keeping pace). Mortgages, which tend to have fixed interest rates, and credit cards, likewise, do not. If we lived in a time where nobody was indebted, poor people had small savings and no investments, and rich people had large savings and larger investments, then perhaps inflation would be more troublesome. But we don't. We live in a time when poor people are in debt up to their eyeballs.

Again, I'm not disagreeing with your general appraisal, but if high inflation existed, it would incentive the assumption of debt by rich people, no? They would no longer 'pay cash' for their house, they would take out a mortgage and let inflation help pay it down for them. Then they could take the cash left over and invest it.

Either inflation helps pay down debt, in which case the rich could use it to leverage their wealth into more wealth, or it wouldn't, in which case it wouldn't be helping close the wealth gap.

I guess one thing to do is to look at historical periods of high inflation. Do you (or anyone else) know what happened to the wealth gap in those periods? Is there any data that suggests inflation would actually work as you envision it?

Again, I'm not disagreeing with your general appraisal, but if high inflation existed, it would incentive the assumption of debt by rich people, no? They would no longer 'pay cash' for their house, they would take out a mortgage and let inflation help pay it down for them. Then they could take the cash left over and invest it.

They might. But so what? They'd still be net creditors, and those savings would still see their real value decline. The poor will still be net debtors, and see the real value of those debts decline. Yes, it's possible that the income-rich wealthy might opt to become asset-poor. I doubt it, myself.

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Either inflation helps pay down debt, in which case the rich could use it to leverage their wealth into more wealth, or it wouldn't, in which case it wouldn't be helping close the wealth gap.

I didn't say anything about any gap. I don't give a shit about a gap.

It sounds as if you'd rather keep the bottom 90% the same and bring the top 10% down to their level than you would double the wealth of the bottom 90% and triple the wealth of the top 10%. I wouldn't. I don't care about the gap. I care about standards of living, access to education and healthcare, employment career prospects, life expectancy, and all the other things that actually make a tangible difference to people's lives. I'm not averse to taxing the rich to achieve social goals (or taxing everyone to counter high inflation), but I'm absolutely opposed to rejecting an economic policy that helps the poor just because some of the rich might also benefit. Talk about cutting off your nose to spite your face.

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I guess one thing to do is to look at historical periods of high inflation. Do you (or anyone else) know what happened to the wealth gap in those periods? Is there any data that suggests inflation would actually work as you envision it?

That inflation reduces the value of debts and savings alike isn't something that needs data to demonstrate.

I also don't understand how one can so cavalierly talk about borrowing and/or printing on the back of the strength of the dollar.

So you want government spending to continue on heavily predicated on the assumption of an ongoing strong dollar, which is itself largely predicated on the dollar being a reserve currency? And you're ok with just building the perpetual existence of that right into your funding model for a large chunk of government?

And if that yields, when inevitably it will, the resulting infalationary spike won't affect most people in the country? Really? A country where most people don't have net savings, live largely on their incomes only, and import most of the finished products they use.. won't have their lifestyles drastically affected by a currency devaluation?

That makes NO sense to me. It screams "Emperors-New-Government". It screams the same fancy-economic models that all those finance whizzes were oh-so-sure would prop up the housing bubble forever and ever and ever. It screams pathology, and insanity to me.

Colour me skeptical of the lovely new invisible clothes that are being peddled.

Is the U.S. reserve currency heavily dependent on it being the global petro dollar?

I also don't understand how one can so cavalierly talk about borrowing and/or printing on the back of the strength of the dollar.

So you want government spending to continue on heavily predicated on the assumption of an ongoing strong dollar, which is itself largely predicated on the dollar being a reserve currency? And you're ok with just building the perpetual existence of that right into your funding model for a large chunk of government?

And if that yields, when inevitably it will, the resulting infalationary spike won't affect most people in the country? Really? A country where most people don't have net savings, live largely on their incomes only, and import most of the finished products they use.. won't have their lifestyles drastically affected by a currency devaluation?

That makes NO sense to me. It screams "Emperors-New-Government". It screams the same fancy-economic models that all those finance whizzes were oh-so-sure would prop up the housing bubble forever and ever and ever. It screams pathology, and insanity to me.

Colour me skeptical of the lovely new invisible clothes that are being peddled.

Is the U.S. reserve currency heavily dependent on it being the global petro dollar?

Partially, but far from entirely. A lot of it has to do with lack of options. A couple years ago, the Euro was starting to look like a viable option, a few groups were even trying to push to a currency basket. Until Europe gets it together, they're not an option. The Chinese are actively opposing the yuan being used, they need to keep the currency depressed to keep growth high. That's really the list of currencies for large enough economies to allow sufficient currency reserves.

My idea for a consumption tax is a bit unorthodox. I wouldn't actually tax at the point of sale, rather I'd have people pay taxes on a tax return that shows total dollars in minus total dollars to savings. The difference is consumption. The idea is that the savings are taxed via inflation, so between these two measures you capture everything.

This only works as intended if 'savings' excludes investments and if all savings are registered with governments.

Taxpayer Alice invests all of her remaining income into the family bun shop. Since that's not savings under Faramir's presumed system, she pays taxes on all of it. The investment is rewarded with a 5% rise in income, of which all the remainder is reinvested but taxed as before. Losing savings at a similar rate to high monetary inflation isn't appealing either but it's a lot less work. Eventually Alice gives up and moves to a state where investment isn't penalized so harshly, like Cuba.

I don't follow. Why would savings exclude investments? Savings are being subtracted from income to determine consumption. More investment leads to less taxable consumption. Alice pays no tax on money spent on the bakery whereas she would pay tax if she had spent that money on a Ferrari. Eventually though Alice, or her kids, are going to want to start living the high life from all the work and investment put into the bakery. They are going to start pulling out cash to spend on themselves. Whether that cash comes out as salary, dividends or selling the business doesn't matter. Once they spend it, it's consumption and taxable.

I misunderstood, then, and your non-taxation of investments was intentional.

We're left then with the definition of savings and investment and how and why they should be registered with governments in order to be exempt from taxation. Ferraris are actually a good example, because they're actually not nearly so much the purchases of consumption that most people imagine them to be, but have a major investment component. Sometimes that investment is in reduced depreciation and resale value maintenance, but quite often it's in the form of capital gains.

This illuminates the misfeature that not only does all income still need to be reported but now a vast range of savings and investment, as well. Then there's the issue of federalism in the U.S. where the central government collects excise taxes but the States collect sales taxes, and why consequently there is no VAT system and there probably never will be one.

In any case, people who don't have net savings and do have net debt--which is descriptive of most people who aren't rich--are helped, not hindered, by inflation. Inflation boosts their wages and devalues their debts.

That's absolutely true of unexpected inflation, like the kind that started when the U.S. printed far more fiat money than it could back with gold, even before Nixon officially removed the gold backing from the dollar.

Targeted inflation, like the stable 2% seigniorage rate for which the Federal Reserve often aims, is priced into the interest rate of the debt, just as risk of nonpayment is priced-in. If this core rate of inflation is not present then the price floor of debt is lowered.

I also don't understand how one can so cavalierly talk about borrowing and/or printing on the back of the strength of the dollar.

So you want government spending to continue on heavily predicated on the assumption of an ongoing strong dollar, which is itself largely predicated on the dollar being a reserve currency? And you're ok with just building the perpetual existence of that right into your funding model for a large chunk of government?

And if that yields, when inevitably it will, the resulting infalationary spike won't affect most people in the country? Really? A country where most people don't have net savings, live largely on their incomes only, and import most of the finished products they use.. won't have their lifestyles drastically affected by a currency devaluation?

That makes NO sense to me. It screams "Emperors-New-Government". It screams the same fancy-economic models that all those finance whizzes were oh-so-sure would prop up the housing bubble forever and ever and ever. It screams pathology, and insanity to me.

Colour me skeptical of the lovely new invisible clothes that are being peddled.

Is the U.S. reserve currency heavily dependent on it being the global petro dollar?

Partially, but far from entirely. A lot of it has to do with lack of options. A couple years ago, the Euro was starting to look like a viable option, a few groups were even trying to push to a currency basket. Until Europe gets it together, they're not an option. The Chinese are actively opposing the yuan being used, they need to keep the currency depressed to keep growth high. That's really the list of currencies for large enough economies to allow sufficient currency reserves.

Thanks for the info...I read that China is starting to build a ginormous refinery with SA to be competed in 2014. China is, imo, consolidating oil contracts globally and I cannot imagine they would want to continue buying in U.S. dollars...any thoughts?

Thanks for the info...I read that China is starting to build a ginormous refinery with SA to be competed in 2014. China is, imo, consolidating oil contracts globally and I cannot imagine they would want to continue buying in U.S. dollars...any thoughts?

China has a ton of dollars, because they buy them to keep their currency depressed. Might as well buy oil with them. If they actually continue to move in the direction of letting their currency rise in value, we're maybe 10 years out from the point where it could be widespread. On a smaller basis, pre-war Iraq toyed with it, I think Iran has done a bit lately, but for the most part everyone prefers dollars if they can get them.

China and Russia have been trading amongst themselves with their own currencies for a while now and I think there are more countries who are ditching the greenback as we speak. I don't know what will replace it but I suspect it will look Chinese

First, you are needlessly turning this into some sort of morality play. Using the monetary and fiscal tools at our disposal to increase GDP growth and the standard of living is a good thing. I don't buy into the Protestant ethic that debt is inherently bad and savings good. Nor is there nobility in shared sacrifice or suffering for its own sake. This is, or ought to be, a basically technocratic discussion.

I don't understand where "morality play" comes into this. You're constructing a strawman.

I pointed out that the American perspective on spending, debt, revenue, spending priorities, etc. etc., are completely twisted, dumb, and unsustainable. The observation doesn't have to involve moral concerns unless you yourself are somehow preoccupied with them.

All this "free money" that you seem to be so gleeful about only seems to allow the American economy, and American population, to continue to perpetuate the delusion that their government, funding, taxation policy, economy, and spending policies can continue forever to be completely detached from any real constraint.

Pointing this out is not a morality play. I don't understand why you would have thought it was.

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Second, the United States is not Greece writ large. We have industrial output of around $10,300 per capita. That's lower than Germany ($11,250) and Japan ($10,700), but not by much. Exports tell a similar story. Although we import lots of oil we also produce a great deal of oil, gas and coal. We have very well respected research universities that attract grad students from all over the world, many of whom stay on. In fact we have net migration inflows from practically every country on the planet. Our private sector attracts more foreign direct investment than any other country in the world by a significant amount.

America has a lot. Yes. It has the riches, intelligence, wealth, and infrastructure of an era when it was still building itself up.

It's just choosing not to build on it anymore. You are referring to the vestiges of legacies that are slowly diminishing in value over time. Oil, gas, and coal are, in this day and age, not what I'd be betting on for future development and growth.

I'd agree with the private sector, at least in the entrepreneurial segment. America still has a strong private sector, risk-taking, new-money-is-better-than-old model that works very well. It's a pretty strong culture. I don't know to what extent it can compensate for the failures at basically every other level.

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... and when these things do start to bite we will be best prepared for it if we are have a robust economy, not one stunted by a foolish, puritanical desire to "balance the budget".

When these things start to bite it's more likely that America will be completely unprepared because all that 'free money' will have let it perpetuate its irrational and neurotic approaches to managing its government and society. More free money, more wars, more retarded social policy, more "tax breaks for everyone! yay free cash!".

Give a methhead a bunch of free money and you can say that the extra cash will help him be best prepared in a couple of months to transition off of meth, but in reality it'll just mean that he'll be more hooked than ever at the end of those two months.

American population, to continue to perpetuate the delusion that their government, funding, taxation policy, economy, and spending policies can continue forever to be completely detached from any real constraint.

I don't believe that this is a majority position in the US. The failure to address it exists in the Congress, while the disgusted voters know that something's got to give.

They're just example numbers for the purpose of illustration. Me, I'd rather make everyone better, even if that improvement is not experienced equally.

The example is theoretical nonsense.

Reality is that extreme concentration of income in the hands of the few (which leads to and entrenches extreme concentration of wealth in the hands of the few), leads to and entrenches concentration of power in society, because that's what wealth translates to in its extremes: power and the ability to influence society towards serving the needs of that powerful class over the general welfare.

It leads to the deterioration and neglect of institutions that help the general welfare, the disenfranchisement of the power-strapped majority, inequality in the justice system, and an overall stratification of the population into have and have-not classes.

And all of a sudden, you're de-funding public education and research and bickering over the efficiency of food stamp programs, while trillions magically materialize to front unnecessary foreign wars and no-oversight bailouts. One set of programs offer opportunity to the masses, while the other funnel wealth back into the upper strata of society. Strange coincidence how they get funded, no?

Why are lower class crackheads so hunted down and punished with harsher sentences, while coke-snorting upper class are let off with a slap on the wrist? Why are common thieves caught and locked up while fraudulent bankers let off without even a slap on the wrist? Why does an electrician get fired for burning down a house and a CEO get bonuses for burning down a company?

One class has the ability to buy protection from society, and insulation from the consequences of their actions... and the rest don't.

Your naive, happy-pink-unicorn theory of some magic rising tide lifting all boats may be appropriate for little Susie's bedtime story.. but it doesn't work for reality.

The example is theoretical nonsense.Reality is that extreme concentration of income in the hands of the few (which leads to and entrenches extreme concentration of wealth in the hands of the few), leads to and entrenches concentration of power in society, because that's what wealth translates to in its extremes: power and the ability to influence society towards serving the needs of that powerful class over the general welfare.

I don't give a fuck about "power". Power doesn't put food on the table or cure your cancer or educate your kids or let you take vacations or provide career opportunities or do, well, anything useful. Power is something for rich, privileged, comfortable individuals to fret about. It's irrelevant to a large majority of the population.

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It leads to the deterioration and neglect of institutions that help the general welfare, the disenfranchisement of the power-strapped majority, inequality in the justice system, and an overall stratification of the population into have and have-not classes.

I don't think that is an inevitable result of power. I think it greatly depends on who has the power. For example, our previous government, which had the power, poured many extra billions of pounds into the health service. That wasn't neglect at all. Nor was it useful, but that's beside the point. Power is extremely concentrated in, for example, Cuba, but the education and healthcare services there are (relatively) well-funded, and both are effective. Concentrated power does not have to come at the expense of the general welfare. It depends entirely on the priorities of the people with power. That Americans prefer a bunch of assfucks interested only in making themselves richer is Americans' own fault--and you'll find that about half the country, at least, regards giving these people power as good policy.

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And all of a sudden, you're de-funding public education and research and bickering over the efficiency of food stamp programs, while trillions magically materialize to front unnecessary foreign wars and no-oversight bailouts. One set of programs offer opportunity to the masses, while the other funnel wealth back into the upper strata of society. Strange coincidence how they get funded, no?

Even if you'd had a completely egalitarian direct democracy, the US would have gone to war with both Afghanistan and Iraq (backed by around 54-60% of Americans immediately prior to the war). So no, it's not fucking strange at all. You can't complain that popular actions such as the invasions of those countries are solely a product of the concentration of power. I mean, it'd be nice, in a sense, if they were; if the majority of Americans could genuinely dismiss them and claim not to have supported them. But they can't.

As for the bailouts, they might not have been popular, but they were nonetheless necessary, so I'm not going to shed too many tears about this gross abuse (@_@) of power.

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Why are lower class crackheads so hunted down and punished with harsher sentences, while coke-snorting upper class are let off with a slap on the wrist?

The inequity of drug laws is not something I would defend. I do not, however, regard it as some inevitable and unavoidable consequence of making rich people richer. There are systems where power is (or has been) even more highly concentrated than it is in the US that have not had these properties. Power concentration isn't sufficient to cause such laws, and I'm not convinced it's even necessary either.

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Why are common thieves caught and locked up while fraudulent bankers let off without even a slap on the wrist? Why does an electrician get fired for burning down a house and a CEO get bonuses for burning down a company?

Because the fraud can't be proven? Because the CEO did as he was expected and had a contractually stipulated bonus?

I don't give a fuck about "power". Power doesn't put food on the table or cure your cancer or educate your kids or let you take vacations or provide career opportunities or do, well, anything useful. Power is something for rich, privileged, comfortable individuals to fret about. It's irrelevant to a large majority of the population.

This is just simple naivety. Reasonably equitable distribution of power is a fundamental bedrock of democracy.

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I don't think that is an inevitable result of power. I think it greatly depends on who has the power. For example, our previous government, which had the power, poured many extra billions of pounds into the health service. That wasn't neglect at all. Nor was it useful, but that's beside the point.

You're conflating a political party running government in a democracy with the social power in a nation being monopolized by a minority class. Unless you're trying to make some semantic point about elected representatives controlling power in government being a "tiny minority that controls power", I don't see the relevance.

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Power is extremely concentrated in, for example, Cuba, but the education and healthcare services there are (relatively) well-funded, and both are effective.

In terms of wealth and income distribution in society, which dictates power distribution among social classes, Cuba compares extremely well with other Latin American countries. Correspondingly, as you so aptly pointed out, their society does a (comparitively) decent job of funding services for their population.

I think Cuba supports my argument better than it supports yours.

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That Americans prefer a bunch of assfucks interested only in making themselves richer is Americans' own fault

They don't prefer assfucks, but they have been duped by them. You're wrong. They may have bought into a destructive and pathological philosophy of social governance, but that's about the sum and total of their internal problems.

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Even if you'd had a completely egalitarian direct democracy, the US would have gone to war with both Afghanistan and Iraq (backed by around 54-60% of Americans immediately prior to the war). So no, it's not fucking strange at all. You can't complain that popular actions such as the invasions of those countries are solely a product of the concentration of power. I mean, it'd be nice, in a sense, if they were; if the majority of Americans could genuinely dismiss them and claim not to have supported them. But they can't.

Public support for Iraq didn't just "occur". It was campaigned for with lies. It was pushed for with misinformation. It was propagandized for with media distortions. The government and media conspired to dupe the people into consenting to that war. Americans' main fault was in trusting their own corrupt institutions to somehow not betray them so fundamentally.

I agree that they're too easily misled, but you're mischaracterizing the lead-up to the war.

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As for the bailouts, they might not have been popular, but they were nonetheless necessary, so I'm not going to shed too many tears about this gross abuse (@_@) of power.

Fine, but the fact remains that there was no real debate about it at all. Wanna talk about paltry millions for essential services? Well there'll be heeing and hawing and holding-forth on the philosophy and nature of individuality and whether it's truly American and on and on. There'll be discussion out the woodwork for it.

Wanna funnel a few trillion without any oversight off to bankers that fucked the economy and keep shit propped up without any heads rolling? It just happens

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The inequity of drug laws is not something I would defend. I do not, however, regard it as some inevitable and unavoidable consequence of making rich people richer. There are systems where power is (or has been) even more highly concentrated than it is in the US that have not had these properties. Power concentration isn't sufficient to cause such laws, and I'm not convinced it's even necessary either.

Inequal access to, and application of, justice IS a property of societies where wealth and power is concentrated amongst a few. That's an empirical, observable reality.

Power concentration isn't sufficient, in theory to cause these imbalances. In reality, it usually just ends up working out that way anyway.

And when it comes down to it, people don't live in your theoretical justice systems where it doesn't have to work out that way. They live in the real societies where things do work out that way, the vast majority of the time.

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Because the fraud can't be proven? Because the CEO did as he was expected and had a contractually stipulated bonus?

As I stated: one class has the wealth, power, and influence to buy themselves protection from the consequences of their actions. The rest don't.

This is just simple naivety. Reasonably equitable distribution of power is a fundamental bedrock of democracy.

It's as equitable as it ever was. One man, one vote. More, in fact, since blacks and women now count as human beings. It's just it turns out that votes don't count for much.

Power is irrelevant to normal lives. If you're struggling to stay nourished, keep your kids clothed and sheltered, fighting just to make ends meet, you don't have time for power. It's inconsequential. Exercising control over the lives of others does you no good.

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You're conflating a political party running government in a democracy with the social power in a nation being monopolized by a minority class. Unless you're trying to make some semantic point about elected representatives controlling power in government being a "tiny minority that controls power", I don't see the relevance.

I'm taking an example of a state with an extreme power concentration and using it to show that it is not the mere fact of having a power concentration that results in the destruction of important public services.

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In terms of wealth and income distribution in society, which dictates power distribution among social classes, Cuba compares extremely well with other Latin American countries. Correspondingly, as you so aptly pointed out, their society does a (comparitively) decent job of funding services for their population.

You wanted to make this about power, so I've made it about power. I've introduced an example where the population has zero power, the ruling elite have all the power. If it's bad that the US population has little power and the US ruling elite has most power, it should be even worse in Cuba, shouldn't it? Except it isn't.

Your analysis is flawed. You're saying that wealth concentration leads to power concentration, and that power concentration leads to destruction of essential social services. It does not. Essential social services can be maintained, and even improved, even with highly concentrated power distributions, and essential services can be destroyed even with highly diffuse power concentrations (see: states where central government has collapsed altogether).

You're trying to blame American policy solely on the concentration of wealth and power. It's not that simple.

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They don't prefer assfucks, but they have been duped by them. You're wrong. They may have bought into a destructive and pathological philosophy of social governance, but that's about the sum and total of their internal problems.

But they do prefer assfucks. Saying that they've been "duped" implies that they've been tricked somehow; that they've been told one thing and that the truth was otherwise. But they haven't. The republicans, in particular, are totally brazen about their desire to enact policies that overwhelmingly favour the rich. There's no dishonesty here: it's public knowledge. The population welcomes it. They look forward to giving the wealthy tax breaks. They can't wait for the destruction of social services. They want these things to happen.

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Public support for Iraq didn't just "occur". It was campaigned for with lies. It was pushed for with misinformation. It was propagandized for with media distortions. The government and media conspired to dupe the people into consenting to that war. Americans' main fault was in trusting their own corrupt institutions to somehow not betray them so fundamentally.

Americans didn't give a shit about "lies". They re-elected George W. Bush for god's sake. The dishonesty was made clear: they didn't care. Take-home message from this all? Lie away, nobody gives a fuck anyway. They had their opportunity to reject the lies and punish people for lying. They didn't.

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Fine, but the fact remains that there was no real debate about it at all.

There was no time for a debate. The markets don't wait for the politicians.

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Power concentration isn't sufficient, in theory to cause these imbalances. In reality, it usually just ends up working out that way anyway.

Except when it doesn't. Like Cuba, where public institutions were well-maintained and haven't been systematically attacked the way they are in the US.

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As I stated: one class has the wealth, power, and influence to buy themselves protection from the consequences of their actions. The rest don't.

Doing things that either aren't illegal or are unprovable isn't "buying protection" in either a literal sense or a figurative one.

In any case, none of this has anything to do with the desirability of inflation to erode consumer debt, or the fact that the US has fiat currency that people are willing to lend for basically 0%. Debt spending (or unfunded spending) to improve infrastructure, reduce unemployment, increase healthcare availability, and so on, would be good for the US. You think that it'd be terrible because somehow it'd make the rich richer, because you're hung up with abstractions like "power". I think the American population would be more interested in these abstractions if they had, you know, jobs and stopped being made bankrupt through medical bills, that kind of thing. Because at the moment you're talking about angels on the head of a pin.

No; threatening civil disorder because other people might gain more is selfish.

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Ok, so how about these numbers:

I would rather have the wealthy increase a little and the poor increase a lot rather than vice versa.

I'd rather have a pony.

What measures can you implement that help the poor a lot but which cannot be taken advantage of by the rich to even greater effect?

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What's your reason for preferring to let the gap grow wider? What is your reason for preferring to favor the wealth growth at the top rather than the bottom?

I haven't expressed any such preference. The concern was raised that measures that might help the poor and hurt the rich--for example, modest inflation--would be exploited by the rich so that they too were helped, and to even greater extent than the poor. This may well be the case--but when would it not be the case?

Saying that they've been "duped" implies that they've been tricked somehow; that they've been told one thing and that the truth was otherwise. But they haven't. The republicans, in particular, are totally brazen about their desire to enact policies that overwhelmingly favour the rich. There's no dishonesty here: it's public knowledge. The population welcomes it. They look forward to giving the wealthy tax breaks. They can't wait for the destruction of social services. They want these things to happen.

More and more brazen all the time, and their supporters cheer even louder.

They do like their social services, though. They just don't call them that, the ones they like.

It's as equitable as it ever was. One man, one vote. More, in fact, since blacks and women now count as human beings. It's just it turns out that votes don't count for much.

If you agree they don't count as much, then why are you talking about it? One man one vote was an early heuristic for distribution of power. It attempts to simulate equal distribution of power over social policy. As you've stated, that heuristic doesn't always work, but there you go.

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Power is irrelevant to normal lives. If you're struggling to stay nourished, keep your kids clothed and sheltered, fighting just to make ends meet, you don't have time for power. It's inconsequential. Exercising control over the lives of others does you no good.

You do enjoy your little semantic games, don't you? I've been speaking pretty clearly and directly about the power to influence society to serve the general welfare over the interests of a specific few. That's not power "over others" in some general sense, it's power over the ability to influence the circumstances surrounding them.

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You wanted to make this about power, so I've made it about power. I've introduced an example where the population has zero power, the ruling elite have all the power.

You've introduced what you think is a counterexample to what is an overwhelming general tendency. You're trying to argue past my point instead of against it. I'm pointing out what tends to happen, by in large. You're stating "it doesn't have to happen all the time".

That's a meaningless point. People who play russian roulette don't die "all of the time". But that isn't a rebuttal to pointing out that russian roulette has some heavy tendencies towards death in the player.

Of course there will be variations. I'm willing to acknowledge that when it comes to social organization and humans, there are few absolute rules. That's why your attempt to reduce everything to absolutes ("those mechanisms which MUST happen ALL THE TIME IN ALL PLACES to be considered") is a pointless and irrelevant approach.

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Your analysis is flawed. You're saying that wealth concentration leads to power concentration, and that power concentration leads to destruction of essential social services. It does not. Essential social services can be maintained, and even improved, even with highly concentrated power distributions, and essential services can be destroyed even with highly diffuse power concentrations (see: states where central government has collapsed altogether).

Yes, "it can be". By in large it doesn't happen. When it does it's rare, and people suffer for long periods of time before it does.

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You're trying to blame American policy solely on the concentration of wealth and power. It's not that simple.

Nope. I'm trying to talk about clear and obvious tendencies. Just because you want to dissect everything into absolutes doesn't mean that everybody thinks that way.

There is an overwhelming tendency where wealth and income disparity leads to power disparity leads to society being reoriented to serve special, landed interests over the general welfare.

A general survey of the world's nations shows reality to be consistent with what I'm saying.

"But, but, CUBA!" isn't a counterpoint to that. Yeah, communist societies tend to have a bit more of a dogmatic emphasis on public services. Capitalist societies (with biases towards free enterprise) tend to show robustness in the entrepreneurial sector (IMHO a more traditionally capitalist institution which tends to work in favour the general welfare and allow for mobility). The societies reflect their underlying policy biases.

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Americans didn't give a shit about "lies". They re-elected George W. Bush for god's sake. The dishonesty was made clear: they didn't care. Take-home message from this all? Lie away, nobody gives a fuck anyway. They had their opportunity to reject the lies and punish people for lying. They didn't.

Yeah. They're particularly gullible when it comes to their down-home politicians. The extent of that gullibility may shock you, but it doesn't justify this stance of yours. Americans actually believed Iraq had something to do with 9/11, and they actually believed that Iraq had or was about to get nuclear weapons. They're particularly gullible, and they've been trained to be that way over

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Fine, but the fact remains that there was no real debate about it at all.

There was no time for a debate. The markets don't wait for the politicians.

Hurricanes wait even less than that, but the government sure did drag their heels on responding to Katrina. Urgent crises isn't what drives quick action in American government. There's just a clear and obvious tendency for action and policy in the general welfare to get dragged on, and action and policy in service of special interests to pass without any question.

The bailout is one example. The war another. Agribusiness welfare another. Defense welfare another. Programs and initiatives which funnel money back to the wealthy classes pass and perpetuate. The ones which serve the general welfare get picked at and fought over endlessly.

Whatever you have to say about the bailout in particular. This general tendency is clearly observed.

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In any case, none of this has anything to do with the desirability of inflation to erode consumer debt, or the fact that the US has fiat currency that people are willing to lend for basically 0%.

The latter point has a lot to do with American society's economic unsustainability.

That free money is basically the reason that American society has been able to improverish most of its people while preserving the appearance of wealth. Americans can't afford the lifestyles they think they can afford - they have to borrow to maintain their lifestyles.

It's also the reason the government has been able to pursue expensive wars of choice, pathological tax policies, and other unsustainable social policies for a long time now.

This isn't "good borrowing". It's not borrowing to invest in the future. At a societal level it's reckless borrowing and at a personal level it's borrowing to maintain an image of prosperity for the masses.

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Debt spending (or unfunded spending) to improve infrastructure, reduce unemployment, increase healthcare availability, and so on, would be good for the US. You think that it'd be terrible because somehow it'd make the rich richer, because you're hung up with abstractions like "power". I think the American population would be more interested in these abstractions if they had, you know, jobs and stopped being made bankrupt through medical bills, that kind of thing. Because at the moment you're talking about angels on the head of a pin.

Yes, there are a lot of wonderful things that a non-gamed, somewhat sane society can do with access to that kind of spending power.

It's too bad America doesn't seem to be in a position to do that. You and others are arguing it could be in theory. I'm pointing out that it hasn't been in practice, and likely is not going to be in the future.

Your analysis is flawed. You're saying that wealth concentration leads to power concentration, and that power concentration leads to destruction of essential social services. It does not. Essential social services can be maintained, and even improved, even with highly concentrated power distributions, and essential services can be destroyed even with highly diffuse power concentrations (see: states where central government has collapsed altogether).

You are talking about logistics here VS reality on the ground. It may NOT lead to destruction of essential social services but that is exactly what is happening. Human nature appears to be greed oriented where it pertains to the present economic system and the system was designed by those who benefit the most from it.

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There was no time for a debate. The markets don't wait for the politicians.

This is irrelevant imo. Banks and energy companies don't wait for their invoices to be paid by those struggling to get by either.

Do you think the current state of the global economy is good? How does it compare to the heyday of the U.S. economy post ww2 till about 1970? That era saw a strong labor force and middle class, less wealth gap etc.

No; threatening civil disorder because other people might gain more is selfish.

Who's threatening it? I'm merely stating that it seems to be a general historical outcome to wealth gaps that increase without bounds. This isn't selfish on my part (other than selfishly not wanting to live in a society with civil breakdown).

Who is being selfish in this scenario? The people trying to set policies to avoid this?

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Ok, so how about these numbers:

I would rather have the wealthy increase a little and the poor increase a lot rather than vice versa.

I'd rather have a pony.

What measures can you implement that help the poor a lot but which cannot be taken advantage of by the rich to even greater effect?

Fiscal policies that are more re-distributive and progressive than the current set.

There have been historical periods where this wealth gap has not increased so dramatically, and yet both the rich and the poor saw an increase in wealth, so there seems to be no fundamental reason why a scenario where this gap is maintained or even reduced even while both rich and poor are better off.

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What's your reason for preferring to let the gap grow wider? What is your reason for preferring to favor the wealth growth at the top rather than the bottom?

I haven't expressed any such preference. The concern was raised that measures that might help the poor and hurt the rich--for example, modest inflation--would be exploited by the rich so that they too were helped, and to even greater extent than the poor. This may well be the case--but when would it not be the case?

? When the re-distribution is highly progressive in nature. Again, as my economic knowledge is lacking, and the only evidence I provided is derived from a school that you dismiss as unpersuasive (and you might very well be right), the fact is that I don't _know_ that your idea about pegging inflation wouldn't be progressive enough. It might very well be.

However, on the face of it, it seems like a very blunt and indirect tool _if_ you think that the wealth gap is one issue that should be addressed.

If you don't care about the gap, if you don't believe that history will repeat itself, then perhaps you don't care.

Why are common thieves caught and locked up while fraudulent bankers let off without even a slap on the wrist? Why does an electrician get fired for burning down a house and a CEO get bonuses for burning down a company?

Because the fraud can't be proven? Because the CEO did as he was expected and had a contractually stipulated bonus?

It's because the fraud wasn't adequately investigated. It's because of full regulatory capture in the financial services industry. It's because banks have bought protection with campaign contributions for fractions of pennies on the dollar. It's because any honest, thorough, and adequately funded investigation into the causes of the 08 meltdown would reveal how the government helped create the crisis (via both irresponsible deregulation and massively inadequate enforcement of what regulations remained) to plain gross corruption. It's because it's all still happening today. It's because the SEC is effectively a branch office of the TBTF banks, that has been transitioning from simply ignoring fraud to aiding and abetting it. It's because it's an utterly bi-partisan crisis, with significant dirt on both parties and a rare mutual interest in keeping it quiet, largely supported by a mass media that is clearly interested in maintaining status quo for its billionaire owners.

How else can you explain the relative silence over MF Global. $1.6 billion in segregated customer accounts -- the fucking sacrosanct untouchable segregated customer account that is the bedrock of bank/customer trust -- removed the cover the bad bets made by company executives led by its massively connected CEO and now housed at JP Morgan (now apparently offering this stolen property back to the victims for just a 10% vig). MF Global is virtually a perfect case study in greed, moral hazard, regulatory capture, political connections and -- now months after the first shit hit the fan -- shocking silence.

As an aside, ask yourself why Fox news isn't shouting from the rooftops about a well connected Democrat and some extremely questionable -- almost certainly illegal -- activities. The phrase, "don't shit where you eat" comes to mind...

Anyway, this HAS to be the case. This guy HAS to be the sacrificial lamb. Sometimes even the elite of the elite have to offer up one of their own. And the rest of us need to hope that this, finally, is the catalyst for desperately needed reforms, safeguards and yes 're-regulation' of an utterly dysfunctional industry. If $1.6 billion of customer (mainly farmers and pension funds iirc) money is simply allowed to be vaporized and reanimated in the accounts of JP Morgan, Wall St will certainly eat itself and guess who will be on the hook again to bail them out, if there's even any money left?

The wheels are already turning for the next bailout, namely student loan asset-backed securities (ABS):

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The Federal Reserve Bank of New York recently reported that as many as 27% of all student loan borrowers are more than 30 days past due.

Almost identical spin is being used for why these ABS's are different than RMBS's were a few years ago, these students face a near terminal 50% unemployment rate as covered previously in this thread and the debt is generally not dischargeable... but but but it's federally guaranteed!

How else can you explain the relative silence over MF Global. $1.6 billion in segregated customer accounts

Bloomberg says that congressional investigators say that the segregated accounts contain a mix of customer money (untouchable) and "excess company funds" (which presumably are fair game). Was there enough of the latter to cover the $200 million transfer?

That does not matter. Comingling of funds is a crime, even without any theft or fraud. Among professionals, it is the single most serious technical violation of professional ethics and regulations. So, no.. covering it is immaterial.

Your analysis is flawed. You're saying that wealth concentration leads to power concentration, and that power concentration leads to destruction of essential social services. It does not. Essential social services can be maintained, and even improved, even with highly concentrated power distributions, and essential services can be destroyed even with highly diffuse power concentrations (see: states where central government has collapsed altogether).

You are talking about logistics here VS reality on the ground. It may NOT lead to destruction of essential social services but that is exactly what is happening. Human nature appears to be greed oriented where it pertains to the present economic system and the system was designed by those who benefit the most from it.

I think it's a reasonable point. If wealth/power concentration doesn't imply the destruction of social services that you're trying to fix, then it seems reasonable to ask if changing the wealth/power concentration will fix the destruction of social services.

If wealth/power concentration isn't the cause of the destruction of public services - and there seems to be reasonable evidence that a very substantial fraction of Americans support this destruction - then changing the wealth/power concentration won't prevent or reverse the destruction of public services.

If wealth/power concentration isn't the cause of the destruction of public services - and there seems to be reasonable evidence that a very substantial fraction of Americans support this destruction - then changing the wealth/power concentration won't prevent or reverse the destruction of public services.

I think there's pretty good evidence that much of the support is the result of propaganda orchestrated by the powerful and wealthy. Not all, we can't dismiss it entirely on those terms, but enough to have an important impact.